As close fans of the monthly jobs report know, the unemployment rate can decline for two different reasons, broadly speaking: either unemployed people can find jobs and employment rises, or unemployed people can give up entirely on the labor force and thus are excluded from the calculation. Read More »

Is your post-college 20-something still living in the basement? Why, yes. Yes, he is.

Driven by young adults, the share of Americans living in multi-generational households continues to climb, a new report released Thursday finds, a trend that accelerated during the recession but has extended beyond it.

A record 57 million Americans—or 18.1% of the population—lived in multi-generational households in 2012, according to an analysis of Census data by the Pew Research Center, a think tank. The rate, up from 17.8% in 2011, has been on a steady march upward since its post-World War 11 low in 1980, when just 12.1% of the population utilized these arrangements.

“After three decades of steady but measured growth, the arrangement of having multiple generations together under one roof spiked during the Great Recession of 2007-2009 and has kept on growing in the post-recession period, albeit at a slower pace,” Pew found. Read More »

–Tax Breaks: Mike Konczal takes a close look at tax breaks. “To get a sense of the size and importance of these things, consider this: The top 10 tax expenditures total about $900 billion a year. Over half of them go to the top 20 percent of households. About a third go to the top 1 percent. The easiest way to understand the tax break state is to think of it in three clusters: (1) tax credits that boost the earnings of those in the bottom half of the income distribution, (2) tax deductions and exclusions that boost the middle class and upper-middle class, and (3) the exclusion of capital gains and dividends from income taxation, which goes to the top 1 percent.”

–Household Debt: The Economist charts changes in household debt across the world. “In the years leading up to the financial crisis, household debt soared in most rich countries. There were a couple of notable exceptions: Germany and Japan, neither of which experienced a housing boom that caused debt to accumulate. The ratio of debt to disposable income rose by an average of 30 percentage points, to 130%, in OECD countries between pre-boom 2000 and pre-crisis 2007. Since then debt levels have fallen in America, Britain and Germany, but they have continued to rise in countries such as France, Italy and the Netherlands, where property prices are still declining. In 2012 household debt in the Netherlands was a whopping 285% of disposable income.”

–Trade:Bernard Hoekman and Ben Shepherd examine trade policy. “Making international trade easier and less bureaucratic – trade facilitation in WTO jargon – is one of the few areas where WTO talks are still making progress. This column discusses recent research that looks at the distribution of gains from trade facilitation among exporters of different sizes. Firm-level data from many developing countries show that firms of all sizes export more in response to improved trade facilitation.” Read More »

Americans have recovered only 45% of the wealth they lost during the recession, adjusted for inflation, the Federal Reserve Bank of St. Louis estimated.

The findings were released as part of the St. Louis Fed’s 2012 annual report, which was made public on Thursday. In the report, the Midwestern bank announced the launch of a new Center for Household Financial Stability, which will track the nation’s effort to dig itself out of the hole it found itself in during the financial crisis.

In the report, the bank said data shows a near complete recovery in total aggregate wealth is misleading. The analysts argue aggregate household net worth data isn’t adjusted for inflation, population growth or the nature of the wealth. They noted a lot of the recovery in net worth has been tied to the stock market, and is thus concentrated in holdings of wealthy families.

–U.S., Euro Zone Debt:Gillian Tett looks at the changes in U.S. and euro zone household debt. “Late last month, the International Monetary Fund published its World Economic Outlook, in which a tiny chart (on page 5) shows that American household debt, as a proportion of income, declined from 130 per cent in 2007 to 105 per cent at the end of 2012. In the same period, eurozone household debt has risen from 100 per cent to almost 110 per cent. Historically, Europeans always had a lower debt ratio than Americans, but those two lines have now crossed. It is a stark contrast to the pattern in 2000, say, when the ratio was only 80 per cent in the eurozone — and 90 per cent in America.”

–Bernanke and Bubbles:Paul Krugman examines whether Fed policy is creating bubbles. “One should never forget the example of Japan, where bets against government bonds — justified by more or less the same arguments currently made to justify claims of a U.S. bond bubble — ended in grief so often that the whole trade came to be known as the “widow maker.” At this point, Japan’s debt is well over twice its G.D.P., its budget deficit remains large, and the interest rate on 10-year bonds is 0.6 percent. No, that’s not a misprint. O.K., what about stocks? Major stock indexes are now higher than they were at the end of the 1990s, which can sound ominous. It sounds a lot less ominous, however, when you learn that corporate profits — which are, after all, what stocks are shares in — are more than two-and-a-half times higher than they were when the 1990s bubble burst. Also, with bond yields so low, you would expect investors to move into stocks, driving their prices higher. All in all, the case for significant bubbles in stocks or, especially, bonds is weak. And that conclusion matters for policy as well as investment.”

–Economists:Dani Rodrik asks what use are economists. “There is one other thing that the public should know about economists: It is cleverness, not wisdom, that advances academic economists’ careers. Professors at the top universities distinguish themselves today not by being right about the real world, but by devising imaginative theoretical twists or developing novel evidence. If these skills also render them perceptive observers of real societies and provide them with sound judgment, it is hardly by design.” Read More »

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